June 19, 2008
Two Ex-Bear Stearns Managers Arrested
White collar perp walk time: WNBC is reporting that the FBI arrested former Bear Stearns hedge fund managers Ralph Cioffi Jr. and Matthew Tannin this morning. Why? Because they allegedly reassured investors the hedge fund was a-okay "before the funds lost more than $1.5 billion in value."
The WSJ's Law Blog breaks it down: On April 22, 2007, Tannin emailed Cioffi, fearing "the market for complex bond securities was 'toast.'" Then "Cioffi and a third colleague persuaded Tannin that he was overreacting," and a few days later, Tannin and Cioffi promised investors all was well. And Bloomberg News writes, "The charges would be the first from a federal investigation of possible fraud by banks and mortgage companies whose investments in subprime loans and securities plunged in value, causing losses that now total $396.6 billion."
The two were arrested at their homes--Cioffi in NYC, Tannin in New Jersey. The authorities will release more details later, but Tannin's attorney says her client is innocent, "He is being made a scapegoat for a widespread market crisis. He looks forward to his acquittal." This year, JP Morgan bailed out Bear Stearns by buying it as a bargain basement price.
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Who couldn't see this coming?
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Rather inevitable for the arrests to start. Someone needs to pay after all...
Just remember, never say incriminating things in an email.
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Accountability on Wall Street? We'll see how the trial/plea bargain ends up.
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As much as I'd love to see shots of the perp walk, this photo is terrific.
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Make them pay!!
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scapegoats... Not that I like their ilk, but scapegoats nonetheless...
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if convicted will the FBI let them drive themselves to prison?
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When asked what they said A-Okay too they thought they meant their bank accounts not the firms...
its ok... The rich get richer and the poor/middle class just pay more in taxes to cover their risks...
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Wall Street, George W. Bush & Oil Companies are why America is quickly becoming the shittiest nation on earth. The founding fathers would have these scumbags all out, American Revolution style.
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just make sure they don't commit "suicide" like israel did last week, fake law enforcers...
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Just two?
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suicide is painless
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This is total B.S. (no pun intended) You simply can’t make indictments based on hindsight.
I'm sure it sounds good on paper, but theres no real case here.
Defense is that no one can predict market behavior. Some one wanted to grab headlines with the “case”.
Every morning in the shower I hear a spot on 1010 WINS about a law firm who will go after stock brokers if you feel you’ve been wronged and lost money in the market. Whats next, a law firm who will sue blackjack dealers in Vegas?
Investing is a gamble. There is no way either of these gents could have predicted the historic and catastrophic loss that was waiting in the wings. They did what every good hedge fund manager would do: calm and reassure your clients when they get emotional. These are bullshit indictments predicated on hindsight acusations.
There is no way ANYONE could have predicted what was about to come. Telling your clients not to worry and that things would level out was all they could do. They were speaking from experience and the natural peaks and valleys of the market in our collective rearview mirror. What happened here was a catastrophic fluke.
You can’t charge people for not being able to predict the unforseen future like it had never unfolded before. They were predicting the future based on education and experience. They did nothing wrong. You can't crucify someone for not being Nostradamus. ESPECIALLY in the current economic climate.
These two are just patsies. Heads on a stick... scapegoats...
They were facing a CDO mortgage market collapse that was beyond their control; huge financial losses and potentially career ending disgrace if they could not keep their Bear Stearns Funds alive.
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Spoken like a True Wall Street Scumbag. They can and ARE being prosecuted. Hope they dont drop the soap in the prison showers. Their "get rich quick, pass the debt to the next sucker" mentality is the who reason for the Mortgage crisis.
Wall Street already lost half of its profits it made in the last year - over $107.2 billion, and thats just the BEGINNING. Wall Street is gonna be laying off even more scumbag traders & scumbag analyst employees than the American Car industry will. Suck on that
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Spoken like a bitter, naive guy that thinks everything is black & white, cut & dry like in the movies. Your view of Wall Street is paralyzingly stereotypical and unsophisticated. Open your eyes, my man.
This indictment is a joke. The first 7 pages are padding where the AUSA describes what hedge funds do. The main charges seem to be that Cioffi engaged in puffery in describing the hedge fund to others and, worse, only lost $4 million of his own money when the fund collapsed, not his original $6 million investment.
This indictment is all bun, no meat. All headline, no story.
Managing risk is an art not an exact science. You can use all the probability analyses and regression based correlation coefficients you want, the market doesn't care about any of that. Your probability models can not predict when the Fed will begin raising rates (which is essentially what caused this problem) because the only predictive indicator of the Fed is that it will do the opposite of what makes good economic sense (unless of course your Goldman Sachs with the best inside info because your former CEO is the Treasury Secretary but thats a whole other can of worms).
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Bottom line is this entire case is predicated on bullshit hindsight and making a grande example because thats what people are thirsting for: personification of accountability. Every good story needs a villain, or in this case two.
But how can people in the industry do their jobs? This isn’t a “case”, this is a matter of people trying to do their best in bad times.
As everyone in this industry knows, you can simultaneously like where you’re positioned in the market and still know you’re screwed (because the market looks terrible). So you ended up with a life raft on a sinking ship. Congratulations, you’re still bobbing around in the ocean. Its not like these dudes were not salesman and their investors where unaware of exactly what they were.
This is abuse of prosecutorial discretion at its worst. Since when is conjecture about the future of the markets a crime?! If debating the direction of the markets and getting it wrong is a crime in the face of all evidence to the contrary, the Fed and entire Bush posse should be in jail for all their bait & switch rhetoric (especially if you are stupid enough to bet on it).
In fact, every time the Fed compares inflation rates today to the 70's and 80's, they are outright lying since the methodology of computing CPI was changed in the mid 1990's using a completely different and antithetical method of calculation.
Further, at least these 2 were not shorting the same securities they were promoting like your Treasury Secretary Paulson did, when he was CEO of Goldman, making billions both ways.
So now you're telling me I can go to jail for having candid discussions with my colleagues along the lines of “Uh oh, our strategy may not be working, what do you think?” If at or near the same time I’m saying to customers, “All’s well.” That’s insane!!!!!!!!!!!!!!!
Business, unlike criminal prosecutions, is all about decision making under ambiguity. And while Cioffi & Tannin may have heard some bad news, don’t forget that a large problem here was that the ratings agencies misrated numerous structured investments. And we are permitted and expected! to rely on such "experts". So why don't we round them up, too?!
I worry because regular Joe's understand 2 main things right now: they understand the credit markets are seriously effed up and they know that “rich” “insiders” are responsible.
This is a case which would allow a jury to show their displeasure at what’s happening in the overall mortgage market; it would allow them to take their grief out on two random men and have them take the veritable fall for the entire mess! and that's simply not justice.
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HAHAHAHAHAHAHAHA Trying to use 100 Pages worth of BullSh!t and Lies to Weasel your way out like typical Wall Street Scumbag. Your post is a metaphor for what Wall Street actually is- hundreds of clueless morons who use Millions of pages worth of Lies & BS "analysis" to trick people into buying their snake oil - which is exactly how the Mortgage crisis Happened. 100 pages of Your Wall Street BullSh!t is worth less than 1 sentence of my truth:
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
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While Gotham City has a decent point, I think that the meat of the prosecution's case is the e-mails from one of the said "scumbags" that questioned whether the investments in question were actually safe.
In other words, Guy 1 brings up valid points about the strength and security of whatever "product" the firm was pushing at the time and Guy 2, taking these legitimate concerns at face value, says "Fuck it, we're Wall Street brokers. I still need my bonus at the end of the year so I need to get rid of this product fast." So they throw caution to the wind and push the shit as fast as they can to get rid of it.
Is this a douchebag move? Undoubtedly so; these two assholes deserve to get this shitty publicity because they clearly lied to their clients. The real question is, is it illegal? I have no basis to make this call, nor do I think Gotham City or jterry121 do either. I think we can all agree that the Bear Stearns guys are assholes. It is doubtful that they will get work in this business again, and if they do a quick Google search will tell any future investors to not fuck with these guys in any capacity. Because the SEC rules are so convoluted and vague with loopholes throughout, I doubt they will see any real prison time, and if they do it will be at Club Fed.
With job skills only in the financial markets (where they will most likely not work again) people can rest assured that they will probably not live the lavish lifestyle that they did while pushing bad dope to the blue chip masses.
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For a moment there I took you for an uneducated dolt but, wow, you really proved me wrong here.
I can see how what I wrote, and explained as laymanly as humany possible, could be misconstrued as "100 pages of bullshit" by someone like you for "hell hath no fury like" a clueless investor burned.
You seem to have some sort of emotional attachment to this whole situation so I'm going to leave it there but just know you are clinging to ancient Michael Douglas/Gordon Gekko stereotypes which proves your scope is as narrow as a pinpoint.
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Wow, a crooked wop!
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^ Will you two just sign the papers already so we can set up the payment plan?
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Wall Street Scumbag, what part of :
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
--SINCE 2007 ALONE WALL STREET HAS LOST $380 BILLION WORLD WIDE, and will LAY OFF TENS OF THOUSANDS
DONT YOU UNDERSTAND??
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That's your mantra?
That's war cry? Your rally chant? Your Tourettic party line?
You've got nothing. You're a headline. Above the fold. No story. Just some bold face print. Either that or you've some sort of inherited neuropsychiatric disorder.
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The Truth hurts eh Scumbag? I guess Denial is the easy road more "Headlines" you might find interesting:
FYI I hear Walmart is taking applications- now that you Wall Street Scumbags are being fired quicker than Auto Workers, better get those McDonalds & Walmart Cashier positions before your fellow desparate Wall Street Scumbags do:
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